This Yahoo Finance poll caught my eye:

I found that interesting in light of what I said about Crocs (CROX) on Tuesday - namely, it isn’t worth speculating on a stock that’s getting crushed after a release like that if people are still highly positive on it. Zack’s.com wrote positively about CROX since then, but otherwise the voices have been decidedly negative, and that sentiment seems backed by the thousands of Yahoo voters. Does this mean we’re close to a bottom in CROX? I couldn’t care less, but with sentiment so negative taking the opposite side seems appealing… if you exclude the fact that I believe Crocs is the next Heely’s (HLYS), i.e. a faddish footwear company that will eventually be stuck with tons of unsold inventory and a single-digit stock price.

But enough about CROX, it really is an irrelevant company. I think the more interesting thing is the high degree of confidence in General Electric (GE). The poor performance of GE of late is likely puzzling to many, because General Electric has so many of the components that are supposed to be “in” with the market right now - a huge global presence to take advantage of the weakening dollar (half its revenues come from overseas), a booming infrastructure business (backlog up 50% year-over-year), and the long-term secular growth story that is healthcare (especially diagnostics). All of these carefully cultivated business traits create a conglomerate with the steady growth that should have the market paying up now more than ever. Why, then, is GE down twice as much as the S&P 500 in the last three months?

I find it hard to accept reasons like the writers’ strike is going to impact NBC, when NBC Universal is only about 10% of revenues and operating profit. GE has lost over $50 billion in market value these past three months, and that is several multiples of the effect two sub-par quarters from NBC Universal will have. This problem seems to be driven much more by GE’s exposure to the financial markets through GE Money and Commercial Finance, which are collectively about one-third of revenues and operating profits. General Electric has said that Commercial Finance has done and is doing well, although there are challenges in the GE Money segment that have led to a tightening in underwriting standards and a close watch on loss provisions. On the surface, this might make sense - but then consider that the segment generates three-quarters of its profits from overseas. What kind of total exposure can that leave on the domestic side? Is it enough to account for the vaporization in market value?

When GE gets up around $40, I start to question the valuation because you’re paying about 2x PEG for a company where it is very difficult to move the needle on intrinsic value. But down in the low $30s? Here, you have a 3.7% dividend, which nicely matches the 10-year, and a great set of underlying businesses that collectively should post close to 10% annual earnings growth - not a bad combination for conservative investors.

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